Anhui Xinke New Materials is taking an 80% stake in Midnight Investment
Renee L. Yuning, ENTscope Staff Writer
Nicolas Chartier’s Voltage Picture is announced the latest Hollywood company to come under Chinese capital’s control. Anhui Xinke New Materials Co., which rolls copper and other metals into thin strips for use in the electronics and auto industries, said it is taking an 80% stake in Midnight Investments L.P., which is Voltage Picture’s parent company, for 350.71 million. Earlier this month, Anhui Xinke established a wholly-owned subsidiary called Wotaji International Media Ltd, to acquire media assets.
Voltage Picture was a Hollywood-based independent filmmaker focusing on film financing, production and distribution. Founded by Nicolas Chartier in 2005, it has accumulated its library to over 150 features, among which The Hurt Locker gained the six Oscar Award and The Dallas Buyers Club achieved three Academy Awards. Those outstanding performances helped to win the worldwide reputation for Nicolas.
With the global economy’s slowly growth and Chinese disappointing performance, the price of raw materials keeps going down while the cost of labor going up. The profit margin for metal manufacturer is irresistibly narrowing down. Despite the terrible economical background, copper manufactory industry in China is low-concentrated but high-competed because of its low technical barrier. Therefore, for the foreseeable future, Anhui Xinke’s traditional copper business might be hard to develop further and continually provide stable, growing cash flow. As firms drawn on a commodities price boom, Metal business has been a lucrative business field in China. When those prices eased, some companies attempted to take advantage of their financial position, diversifying their businesses into other sectors.
For those Chinese capital who are trying to march into American entertainment industry, Hollywood’s independent production companies have become their perfect targets in terms of the rapid expansion. According to Theatrical Market Statistics 2015 from MPAA, American independent production companies had produced 390 films in 2006, while the big six major studios had accomplished 204. When it comes to 2015, the number of independent studios’ production has increased 43.8% to 561, and the six major studios’ statistic has decreased 27.9% to 147. By acquiring those independent filmmakers with affordable assets, Chinese investors achieved channels accessing Hollywood’s market. Reuters quoted the firm’s statement, saying that the acquisition would enable its position in the domestic and international business, and would significantly boost its profitability.
Xinke for sure is not the first mover. The recent trade between China and America included Tang Media Partners (TMP)’s purchase of 60% share of IM Global, Wanda’s 1billion acquisition of Dick Clark Productions and 3.5 billion deal with Legendary Entertainment. Other Chinese companies with capitals in Hollywood cover Tencent, Alibaba, Huayi Brothers, Fosun and Hony Capital.
“I think this is a case of Chinese companies that have cash and are looking at overseas investment opportunities, and realizing that staying within their own sector does not offer a lot of room for growth,” said Benjamin Cavender, senior analyst at China Market Research Group in Shanghai.
Concerning the risk of this deal, Wall Street Journal (Chinese version) indicated that these kinds of cross-border acquisition may encounter the the policy execution, law compliance and some taxation problem.
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